What happened

Shares of Domo (NASDAQ:DOMO) have gotten utterly destroyed today, down by 34% as of 11:30 a.m. EDT, after the company reported second-quarter earnings. The results met or beat expectations, but investors were rattled because Domo also cut its full-year guidance.

So what

Revenue in the second quarter of fiscal 2020 came in at $41.7 million, which is on target with consensus estimates. The cloud-based business analytics platform, which uses a software-as-a-service (SaaS) model, saw subscription revenue increase 24% to $34.9 million, and billings were $38.8 million. Non-GAAP net loss was $26.4 million, or $0.96 per share. Analysts were expecting Domo to lose $0.99 per share on an adjusted basis.

Red numbers and a red line going down

Image source: Getty Images.

"While we continue to aggressively pursue our growth objectives, in Q2 we executed well on cost controls and improved our cash burn, and we remain committed to achieving cash flow positive status with the cash on our balance sheet," CEO Josh James said in a statement. "As we look ahead, we are very optimistic about the opportunity in front of us."

Now what

Guidance for the third quarter calls for revenue of $41.5 million to $42.5 million, which is expected to translate into a non-GAAP net loss per share of $1.00 to $1.04. The company cut its forecast for full-year fiscal 2020, however, and now expects revenue to be $168 million to $169 million, down from the prior outlook of $173 million to $174 million. Adjusted net loss per share for the year should be $4.00 to $4.10, worse than the previous guidance of $3.79 to $3.87 per share.

On the earnings call, CFO Bruce Felt clarified that "overweighting of our efforts on large deals with large customers resulted in decreased productivity from our enterprise reps" while outlining initiatives that Domo is taking to improve its performance, such as hiring more sales reps to target corporate contracts, among others. Given uncertainty in implementing those initiatives and unpredictability in closing large deals, Domo is taking a conservative approach to its outlook. "This approach is not to be interpreted as anything other than us being prudent in our approach to providing guidance," Felt said.

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